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If you don’t have rock-solid finances, now is not the time to buy a home – The Globe and Mail



Aspiring owners should think carefully before buying a home with the minimum down payment. So warns Canada’s most vocal housing official.

“A first-time home buyer purchasing a $300,000 home with a 5-per-cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall just 10 per cent, which we are forecasting,” Evan Siddall, chief executive of the Canada Mortgage and Housing Corp. (CMHC), told a parliamentary committee earlier this week.

This fate could affect a large cohort if they’re forced to realize those losses. An estimated one in three first-time buyers and one in eight new mortgages have less than 10-per-cent equity. Most such folks are putting down just 5 per cent, which, after default-insurance fees, leaves them almost 100-per-cent financed.

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When you’re nearly 100-per-cent financed with no backup funds, you can’t move, refinance or sell without a loss.

You’re essentially trapped in your four walls.

That’s an eerie feeling, especially if prices are collapsing all around you.

It’s a depressing feeling if you have children and need a bigger home.

It’s a desperate feeling if you must move to accept an out-of-town job offer.

It’s a panic-inducing feeling if you lose income and can’t pay your mortgage at all.

Home buying with 1-per-cent equity has risk in normal times, let alone during what could be the most severe recession in modern history.

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Forget all those economists and their shot-in-the-dark forecasts. What does your gut tell you about where home values might be headed when we’re about to see:

  • An estimated 41.3-per-cent collapse in economic output this quarter, according to a Bloomberg survey of economists;
  • As many as one in five working-age adults either jobless or with major loss of income;
  • Up to one in five borrowers potentially unable to pay their mortgage after deferrals stop (the “deferral cliff,” as CMHC puts it);
  • Tens of thousands of businesses that will never again reopen;
  • Record mortgage delinquencies that could double the 1980s peak, per CMHC numbers.

Sure, the government is rolling out billions of dollars in various forms of short-term financial assistance, and sure, banks are deferring mortgage payments temporarily. But fast-forward to October when millions could still be off work while deferrals end. A year from now, CMHC fears tens of thousands of low-equity homeowners could owe more than their home is worth.

If you’re anxious to own a home, I don’t blame you. But if you’re not rock-solid financially, renting a bit longer is sensible risk management.

And remember, CMHC will garnishee your wages and pursue you up to the point of bankruptcy if you get an insured mortgage and don’t pay.

Should 5-per-cent down payments be banned?

Government policy makers are considering it and some fear they’ll hike the minimum down payment to 10 per cent.

That’s not going to happen near-term, not across-the-board, anyway. If it did, a price correction could become a price crash. The time to enact tough mortgage rules is before a crisis, not during a crisis.

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If credit tightening is measured – i.e., the feds don’t mandate 10-per-cent minimum down payments across the board – then higher down payments on select borrowers is arguably less negative than a potential flood of panic/forced sales from those borrowers.

Timing is key with so much at stake. Plummeting home prices would cost hundreds of thousands of jobs, a nose-dive in consumer spending, record lender losses, limits on refinancing, losses for seniors who rely on equity for survival and so on.

Were Ottawa to suddenly force 10-per-cent down industry-wide, the government could bear the blame for pushing housing off a cliff, and deep down it knows that.

Either way, it’s understandable to at least temporarily require bigger down payments – even 10 per cent – from less-qualified borrowers, those with weaker credit, higher debt ratios, less stable income and few backup financial resources.

If that sounds anything like you, don’t wait for the government to tell you that you can’t buy. Be a happy renter until at least later this year. Then re-evaluate.

Robert McLister is a founder of and intelliMortgage, and mortgage editor at You can follow him on Twitter at @RateSpy.

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Potential COVID-19 vaccine clears 'major milestone': Sask. researchers –



A potential COVID-19 vaccine has achieved a “major milestone” in moving toward human clinical trials, according to researchers in Saskatchewan.

The University of Saskatchewan’s Vaccine and Infectious Disease Organization-International Vaccine Centre (VIDO-InterVac) said Monday that a vaccine candidate it has developed has proven to be “highly effective” in pre-clinical trials in ferrets.

VIDO-InterVac said the ferrets received two immunizations prior to being exposed to SARS-CoV-2, the virus that causes COVID-19.

The potential vaccine induced a strong immune response, generated neutralizing antibodies and decreased viral infection in the upper respiratory tract to “almost undetectable levels”, the centre said.

It said several more trials are planned over the next few months, including safety studies to prepare for human clinical trials this fall.

Centre director Dr. Volker Gerdts said it is likely this candidate will be a vaccine one day. 

“Oh, it’s very likely,” he said. “We purposely chose a technology that is well-known, well-established and has a proven track record.”

Gerdts said he hopes the vaccine will be ready under emergency authorization in the first half of 2021 for populations in the highest need.

“We honestly don’t know right now,” he said.

Targeted populations could include front-line health-care workers or the elderly, he said. The general public would likely have to wait longer for the vaccine.

“I think it’s going to take a little bit longer than that,” he said. “Probably the summer of next year.”

A potential COVID-19 vaccine has achieved a ‘major milestone’ in moving towards human clinical trials, according to project leader Dr. Darryl Falzarano. He says the team believes the outcome is successful enough to move onto the next stage. 4:29

The vaccine candidate was developed from the team’s previous research on other coronaviruses, including SARS and MERS, the centre said.

VIDO-InterVac is also working on a vaccine manufacturing facility that will be GMP (Good Manufacturing Practice) certified to support vaccine production capacity in Canada, it said.

In addition to COVID-19 vaccine development, it is working with research groups around the world to test antivirals and therapeutics against COVID-19.

Since early March, VIDO-InterVac has been awarded more than $50 million in federal and provincial funding for COVID-19-related research.

“That’s been very helpful,” Gerdts said of the funding. “It allows us to essentially do all of these things in parallel, so we don’t have to wait until one activity is completed.”

The centre said it was the first lab in Canada to isolate SARS-CoV-2 and the first lab in the country to establish an animal model for testing vaccines, antivirals and therapeutics.

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Gold prices in China fall as net imports from Hong Kong drop –



China’s gold imports via Hong Kong in April fell short of its exports for the first time since at least 2011, as measures to contain the spread of coronavirus hammered demand in the top consumer.

Net imports in April crashed by about 176 percent to minus 10.3 tonnes versus the previous month, data from the Hong Kong Census and Statistics Department showed on Monday. The drop came after net gold imports nearly trebled to 13.523 tonnes in March.


“China’s gold price was trading at too big a discount compared to the overseas price, so gold imports fell a lot because supply inside the country is abundant already,” Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS, said.

Dealers in China, which is a top global consumer, sold gold at discounts of up to $50 to $70 an ounce ($1.61 to $2.25 a gramme) versus benchmark spot prices last month, the most on record according to data going back to 2014. 

“At the same time, gold flowed out from mainland China to Hong Kong, thus it turned from net imports to net exports in April, the first time since 2011,” Li said.

Exports to Hong Kong stood at 14.513 tonnes, compared with 0.685 tonnes reported for March.

China’s total gold imports via Hong Kong plunged more than 70 percent to 4.213 tonnes from 14.208 tonnes in March.

The fall in shipments followed a slide in demand for the precious metal as the country battled the coronavirus pandemic. Beijing dropped its annual growth target for the first time on Friday.

The Hong Kong data may not provide a complete picture of Chinese purchases as gold is also imported via Shanghai and Beijing.

Reuters news agency

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Would Shoppers Come Back As Malls Open



Malls across the country are beginning to open their doors after weeks of government-mandated shutdowns, but both operators and retail tenants are stepping into uncharted territory amid the COVID-19 pandemic.

In the near-term, operators are focused on reopening their properties safely, but there’s a larger concern that shoppers — who have embraced e-commerce and curbside pickup since the pandemic’s outset — will be unimpressed upon returning to malls as many stores remain closed and new safety measures change the experience.

Tim Sanderson, head of Canadian retail at Jones Lang LaSalle, said he’s worried about a repeat of U.S. retail giant Target’s ill-fated attempt to penetrate the Canadian market, where supply chain issues resulted in empty shelves and annoyed customers who left and never came back.

“This is the experience that I fear, that we fear, could happen in the malls,” he said. “Someone goes to a shopping centre, goes through all of the protocols involved, walks into the shopping centre, and the store she came for is not even open, but also, the experience is going to be underwhelming.”

New protocols

Sanderson emphasized that the safety measures malls have rolled out, such as one-direction travel, reduced or eliminated seating, physical distancing requirements and increased security to enforce policies, may be detrimental to the shopping experience but are crucial as a resurgence of the pandemic is the worst-case scenario.

“If we re-open business, and then the government has to lock it down again, I think that’s just bad for everybody in a whole lot of ways, not just shopping and retail, but peoples psyche and everything,” he said.


The old ways of shopping will have to change, as physical distancing in the age of COVID-19 will be the rule. (Anis Heydari/CBC)


Mall owners have a strong incentive to get their properties open safely, as rents have plummeted following the provincial orders to close.

Owners were only paid about 20 to 25 per cent of their expected April rent, and around 15 per cent in May.

“There’s lots of talk among the retail and landlord community about what rents look like going forward, people have had a major, major impact to their sales.”

But he said there hasn’t been much progress as nobody’s in a position to say what sales will look like, or what rent levels will be affordable.

Mall owners, like many other landlords, have engaged tenants in rent deferrals to help struggling tenants.

Ivanhoe Cambridge has given deferrals to the “vast majority” of tenants “in solidarity with the difficult circumstances,” said spokeswoman Katherine Roux Groleau.

Some landlords are stepping in to help in other ways. Brookfield Asset Management, which has extensive mall holdings especially in the U.S., has said it’s ready to invest $5 billion US in large retailers to keep them afloat.

The situation could also lead to a return of pure percentage deals, where rent is tied to sales, especially for restaurant tenants, said CBRE Ltd. vice chair Paul Morassutti.


Reitmans is one of many retailers to have been hit hard by the pandemic. (Evan Mitsui/CBC)


The crisis, however, will likely also accelerate the trend already underway of mall properties moving away from strictly retail, especially as numerous retailers like Reitmans, Aldo, Pier 1 and others go into creditor protection.

“This pandemic has accelerated the timing for some of those stores,” said Ray Wong, vice president at Altus Group.

“It’s not just the pandemic, they were having challenges before, and this just pushed them along.”

He said that while some premier shopping centres like Yorkdale Mall in Toronto will continue to see high demand, others in secondary markets could see an accelerated switch to more mixed used condos and rentals and office, while some in smaller markets might not survive as retail spaces at all.

“Certain malls or certain shopping centres, it may not be viable to have retail there and it may be redeveloped to other types of uses.”

The coronavirus outbreak, and the resulting shift to working from home, could also make people more reluctant to take long commutes and will instead gravitate to suburban hubs, like a massive development Oxford has planned for central Mississauga to further the trend of diversifying mall properties.

“It will be really interesting to see the discussion on the office front, with more people working from home, not wanting to do the two-hour commute on the subway, that they prefer locations that are closer to where they live, especially in the suburbs,” said Wong.

“It’s a constant juggling act to figure out what will work.”

Source: -cbc-ca

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Edited By Miller Harry

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